Who represents non-accredited investors in a private placement?

In a private placement, a purchaser representative plays a critical role in representing non-accredited investors. This individual or entity is tasked with assisting, advising, and ensuring that non-accredited investors understand the terms and risks associated with the investment opportunity. Non-accredited investors, by definition, do not meet specific financial criteria that would allow them to invest in certain private offerings without additional protections.

The presence of a purchaser representative is vital because it mitigates the information asymmetry that might exist between the non-accredited investor and the issuer of the securities. By acting on behalf of the investor, the purchaser representative helps ensure that their interests are adequately represented and that they receive sufficient information to make informed decisions. This role is particularly important in private placements, as these opportunities often involve complex financial instruments and less regulatory oversight compared to public offerings.

In contrast, underwriters typically work to help companies raise capital in public offerings and are not specifically aligned with the interests of non-accredited investors. Accredited investors have the financial standing to participate in certain private placements without a purchaser representative, while financial advisors generally assist investors in managing their portfolios rather than specifically representing them in private placements.